Decision-making for executives

Left Brain, Right Stuff
Phil Rosenzweig
Public Affairs, 315 pages, $32.00
Much has been written about decision-making in recent years, as we learn more about how the brain works and behavioural economists devise experiments to understand how we approach choice. But much of it could lead us astray, Phil Rosenzweig, a management professor at IMD business school in Switzerland, warns.

First, many of those studies are based on situations where the experimental participants can’t influence the options. But in real life executive decision-making, we can impact what happens after the decision-making occurs and we move to implementation. If you are asked, for example, to develop a five-year project to a tight budget that seems a bit too tight to accomplish, you can assume that once you get into the thick of the actual work some economies will become apparent, and therefore go ahead even if at this point it seems risky.

Second, many decisions have a competitive dimension. We not only seek to do well, but must do better than our rivals. When governments issue an RFP, for example, those applying must usually provide the best price or they lose any chance of winning the contract. So the bidders have to take that into account in making their submission. Finishing second on every RFP bid won’t get a contractor anywhere.

Third, many decisions take a long time until we know the results. Feedback, therefore, is slow and our adjustment delayed, which can differ from laboratory tests.

Fourth, many decisions are made by leaders in an organization. So beyond the specifics of the matter at stake, the decision-maker is also concerned with perception and credibility and can potentially inspire people after the decision to rally behind the course of action.

Rosenzweig has developed an approach to decision-making that he believes is more appropriate for leaders in organizations. He calls it left brain, right stuff.

It starts with the fact that problem solving involves a deliberate and analytical approach. We normally consider that as coming from our left brain although he stresses in reality both of the brain’s hemispheres are used in many tasks. But left brain usually is associated with logical reasoning, and that is vital in decision-making. He says that using the left brain means:

• Knowing the difference between what we can control and what we cannot between action and prediction;
• Knowing the difference between absolute and relative performance, between times when we must do well and when we must do better than others;
• Understanding when it’s better to err on the side of taking action and failing, and when it’s better not to act – a tricky dimension that can underlie decisions;
• Determining when we are acting as lone individuals or as leaders in an organizational setting and inspiring others to achieve high performance;
• Recognizing when decision-making models such as those from economics can help us make better decision, but also the limits they contain.

Yet if you get all that left brain thinking correct, he still insists it’s not enough. “Great decisions also demand a willingness to take risks, to push boundaries and to go beyond what has been done before. They call for something we call the right stuff,” he writes.

The right stuff, a phrase coined by Tom Wolfe in his 1979 book about the U.S. space effort, was intended to capture the attributes that distinguished the best pilots from the rest. They risked their necks, but Wolfe noted any idiot could do that. It was about, in Wolfe’s words, having “the moxie, the reflexes, the experience, the coolness” to know how to handle the more precarious moments. In decision-making terms, call it the intelligent management of risk.

So left brain, right stuff. “Great decisions call for a capacity for considered and careful reasoning and also a willingness to take outsize risks,” sums up Rosenzweig.

And you can’t practise these decisions, he stresses. Much has been written in recent years about the importance of deliberate practice, notably by best-selling author Malcolm Gladwell and Fortune editor Geoff Colvin. We can learn at work and in life by practice, like a violinist learning to play more proficiently or a basketball player shooting endless foul shots to improve his success. A workplace example might be practising before giving a presentation and the practice will improve performance.

But Rosenzweig also alerts us to the fact that some things can’t be improved by practice and one of those is often decision-making. “Executive decisions aren’t like shooting baskets. In fact, as a general rule the more important the decisions, the less opportunity there is for deliberate practice,” he warns.

A great deal of research has gone into biases that can ruin our decision-making, and one that has received a great deal of attention is the illusion of control. We think we have more power over situations than we do, and don’t adequately consider how much is out of our control. In an era when we are told to just think positively or that there is a mystical law of attraction that will take us to our goals, that bias can be significant.

But Rosenzweig also points to research that has shown people do not consistently overestimate their level of control. He also says that so many of the experiments on which the illusion of control notion is based involved instances of low or no control like throwing dice or choosing lottery tickets. That means researchers could only look at the tendency to overestimate control and not the reverse.

The important lesson, he argues, is that we should try not to underestimate our control. With respect to managerial decisions, he points out the word manage comes from the Italian word for “to handle,” and is a cousin of the word manipulate. “Managers don’t just make choices they cannot influence, like a shopper buying one product or another or an investor buying or selling a share of stock,” he writes, citing situations in which decision research has occurred. “Nor do managers merely place bets, akin to buying a lottery ticket or throwing dice. The essence of management is to exercise control and influence events.”

Managers obviously can’t control situations after they make decisions. They are buffeted by events and factors outside their control. But they do have influence, and need to factor that into their decision-making with a dash of risk-taking. When facing a decision, it’s vital that they consider what control they have – perhaps none, but perhaps a lot.

Jack Welch, the famed CEO of GE, said that “as a leader your job is to steer and inspire.” When it comes to decisions, leaders have onlookers – and need to be aware of that fact. Rosenzweig says that when Houston found out it had a problem with the Apollo 13 spacecraft, flight director Gene Kranz’s responsibilities were partly analytical – figuring out what had happened and what to do next. “But Kranz’s role was about more than selecting the right option. As team leader, his job was to influence outcomes. He wasn’t trying to predict a safe end to the story; he had to guide his team to achieve a safe return. The necessary mindset was not just deliberative but implemental.”

Kranz was under no illusion about the severity of the situation. But while recognizing as he spoke to his team “we’ve had a hell of a problem,” he also told them. “When you leave this room you must believe that this crew is coming home. I don’t care about the odds and I don’t give a damn that we’ve never done anything like this before.” He was instilling conviction that they would win.

That was the right stuff. Along with his left brain, it was absolutely essential.

The book provides an incisive, easy-to-read look at the research on decision-making and how to apply the left brain, right stuff approach. It will help you to think through aspects you may be forgetting or even fearing, and help you to get the right stuff.

About this author

Harvey Schachter is a writer, specializing in management and business issues. He writes three weekly columns for the Globe and Mail and The Leader’s Bookshelf column for Canadian Government Executive, and a regular column and features for Kingston Life magazine.
Harvey was editor of the 2004 book Memos to the Prime Minister: What Canada Can Be in the 21st Century. He was the ghostwriter on The Three Pillars of Public Management by Ole Ingstrup and Paul Crookall, and editor of Getting Clients, Keeping Clients by Dan Richards.
A McGill commerce graduate, Harvey spent more than 15 years in a variety of positions at The Kingston Whig-Standard, including editor and planning and promotions manager. He won two National Newspaper Awards for his writing and a national Owl Award for a marketing program he created at the newspaper.